Psychology and Trading Tip

June 6, 2009 – Tomorrow, another trade

There are many things that we traders don’t do well. At least me. One of the things I find the most difficult (but I’m working on it) is patience, or rather lack thereof. This can lead to overtrading or in taking trades just for the sake of being in a trade so that you can watch it evolve. Bad mistake.

I have learned over the years, however, a grand secret of trading which I will share with you today. You’ll probably come to that conclusion yourself one day if you haven’t already, but if you haven’t yet, believe me because it’s true: tomorrow, there WILL BE another trade opportunity. If you don’t have a good set-up (when trading manually) in front of you right now or if your bots haven’t entered a trade today YET and you get impatient, tell yourself that you can’t stop time from going by and eventually time will pass and you’ll be 5 or 10 hours from now and your charts will look much different than they do now and you WILL get another trading opportunity. There’s always an opportunity, specially in forex. There are every day. So don’t enter a trade if you don’t “feel” it right (manually) or go do something else rather than wait for your bots to take a trade.

Also, tell yourself there will be other opportunities if you just had a bad trade. It’s part of the game to have some losers. We’d all like to have only winners, at least I would. But it’s just not possible. And the important thing is to have more winners than losers. Forget that “bad” trade and move on. Tomorrow there will be another great opportunity.

Try to stay positive, but also prudent. Greed is a human trait we have to live with, but put a lot of effort into trying to be the least greedy you can. Take some profit early or move your trailing stop or stop loss so that you can secure some profit. If a wick hits your stop loss and then price continues in your direction, don’t start cursing. Be happy with your current actualized profit. This is real money, not potential money. And tell yourself there will be another great chance to make another great trade tomorrow. Why? Because there will always be another trade opportunity tomorrow!

(Well, ALRIGHT! - you can't say that on Fridays........... ;-) )

Happy Saturday to all !